Lu Bei Chemical Industry Turns Loss into Profit

Lu Bei Chemical Industry Turns Loss into Profit, Implements Cost Reduction and Efficiency Improvement Due to Market Downturn

Lu Bei Chemical Industry Turns Loss into Profit
Photo by Li Yang / Unsplash

On March 7th, Lu Bei Chemical Industry (600727.SH) released its 2023 annual report, revealing a successful turnaround from loss to profit.

However, the revenue growth was limited, increasing by less than 2% year-on-year, with a significant gap in net profit attributable to shareholders compared to 2021. The company undertook extreme cost-cutting measures internally last year, reducing management expenses, financial expenses, and research and development expenses by 26.21%, 113.21%, and 79.03% respectively.

Lu Bei Chemical Industry operates in industries such as titanium dioxide, methane chloride, rock salt, bromine, fertilizers, and cement. In 2023, titanium dioxide accounted for 69.26% of the main revenue, methane chloride for 16.01%, fertilizers for 5.55%, rock salt for 2.84%, bromine for 1.06%, cement for 1.57%, and other products for 2.27%.

The annual report for 2023 revealed that Lu Bei Chemical Industry had a revenue of approximately 4.994 billion yuan during the reporting period, a year-on-year increase of 1.96%. The net profit attributable to shareholders of the listed company was around 101 million yuan, a significant increase compared to the previous year but still lower than in 2021. Non-GAAP net profit increased by approximately 207.70% year-on-year. Operating cash flow decreased by about 525.7 million yuan year-on-year.

As of December 31, 2023, Lu Bei Chemical Industry's consolidated balance sheet showed total assets of around 8.517 billion yuan and total liabilities of about 5.207 billion yuan, an increase of approximately 758 million yuan from the previous year.

In terms of quarterly performance in 2023, the highest revenue was in the third quarter at around 1.579 billion yuan, while the highest net profit was in the fourth quarter at approximately 62.1486 million yuan.

Regarding cash flow changes, the financial report indicated that significant purchases in the first quarter led to a decrease in cash flow in the second quarter due to lower cash payments for purchases. Increased cash payments for purchases in the fourth quarter and higher sales receipts resulted in negative cash flow.

The fluctuation in income and profits was attributed to changes in sales volumes and prices of various products throughout the year. Despite market challenges, Lu Bei Chemical Industry managed to improve its performance by focusing on cost reduction and efficiency enhancement strategies.

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